Subsidy for wind power survives another year

The Production Tax Credit for wind power, which gives a subsidy of 2.2 cents per kilowatt hour of wind power produced, was on the chopping block, due to sunset at the end of 2012. Despite heavy lobbying from the American Wind Energy Association, things didn’t look great for its extension, which would have sent the wind industry into the dumps.

Well, late New Year’s Day, it was all celebrations for wind power advocates as President Obama signed a one year extension for the subsidy that allows the credits to apply not just to wind projects that are completed in 2013 but those that are begun. Expect this to mean that a lot of projects get rushed into construction next December as the same last minute lobbying attempts to get the subsidy extended yet again.

The wind industry is still in better shape than solar if only because wind remains relatively competitive, coming in at around 9 cents per kilowatt hour in terms of its levelized cost (solar runs about 15 cents and natural gas is 6-7 cents). Most models predict that wind and solar will continue to slope downward in cost and the companies that can survive over the next 6-10 years until grid parity is truly here, will do very well.